MUTUALITY,PERFORMANCE AND EXECUTIVE COMPENSATION†

ABSTRACTS The determinants of CEO compensation within the UK Building Society sector are investigated. Using an unbalanced panel data set for the period 1986–90, we find only weak support for the existence of a positive link between performance and CEO remuneration. In contrast we find age to be an important determinant of CEO pay increases. This finding reinforces the oft noted potential for inefficiencies in mutuals. Given that alternative market based control systems are absent, our results suggests that there is a lack of any mechanism to align owner and manager interests in the UK building societies.     

POLLUTION AND RESOURCE ALLOCATION*

Our economic perspective of the pollution problem characterizes that problem as involving a conflict between the consumption of two broad classes of goods–physical (or produced) commodities and the direct consumption of 'clean environment'. After considering the relative merits of market and political decision-making processes used to achieve appropriate social choices between the consumption of physical goods and 'clean environment', we focus on the alternative policy options for pollution control. The main conclusion we reach is that, in general, fiscal instruments (taxes and subsidies) are a more efficient means of controlling pollution than the widespread use of regulations or other legal instruments.     

Internalization v. Decentralization: An Analysis of Recent Developments in Pay Bargaining

It is commonly assumed, particularly within the human resource management literature, that decentralized bargaining, performance-related pay and individualized wage-setting arrangements represent a further extension of the internal labour market and a source of efficiency gains in production. Drawing on new data on company pay policies, this paper advances an alternative interpretation of recent innovations in pay and bargaining. It is argued that moves to fragment bargaining and reward systems threaten to undermine the organizational principles of internal labour markets and may, therefore, raise the costs of managing the employment relationship.     

Vertical disintegration and the life-cycle of firms and industries

T0he degree of vertical integration experienced by a firm is an important managerial decision variable. It is an issue where there is a distinct lack of unanimity in studies on the economics of organizations. Moreover, studies have tended to ignore the complementary feature of vertical disintegration. This study examines the basic Stigler hypothesis that vertical disintegration is the typical development in growing industries. Using UK data on divestments, the results initially indicated some positive relationship between industry growth and vertical divestment activity; however, when different categories of asset transfer were examined, the Stigler view was rejected in favour of a null hypothesis.     

Cost - effectiveness analysis in practice: A case study of domestic water supplies in an African country

British aid policy calls for a large proportion of the programme to go to the poorest people in the poorest countries. This case study illustrates ways in which project selection and appraisal can aid this aim for projects whose output is non-tradeable and non-marketed but which may often be important to a poverty-focused programme. It attempts to demonstrate a framework by which such projects can consistently be examined paying particular attention to their objectives, the nature of their beneficiaries, and the recurrent budgetary implications for the host Government.     

Informal boundary-spanning communication in the innovation process: an empirical study

The sources of ideas embodied uithln successful technological innovation have been a subject of interest in many studies since the 1950s. This research suggests that sources external to the innovating organization account for between 34% and 65% of the inputs important to the development of successful innovation. In addition, studies have long highlighted personal boundary-spanning communication as an important mechanism for the transference of such ideas. Despite this recognition, there has been little systematic evaluation of the role and importance of informal boundary-spanning communication in the innovation process. This paper provides the results of an empirical study, of the role and source of infomally derived inputs into the development products of 35 commercially successful innovations. It was found that inormal mechanisms were often enlployad to transfer ideas and information, as well as other resources, during the idea-generation, ,problem-solving and field-testing phases of these innovation projects. Indeed, the research indicates that the mobilization of informal boundary-spanning contacts and networks my ofen be an important, and sometimes critival, factor in successful innovation.